ASX Property Stocks Hammered as RBA Hikes and AI Fears Collide – Buy, Hold or Walk Away?

ASX property stocks slide after RBA rate hike

It was a rough week for property investors. The ASX200 AREIT Index fell 4.09% in the week ending 6 February 2026, its worst weekly performance in months. The sell-off came from two directions. On Tuesday, the Reserve Bank of Australia raised the cash rate by 25 basis points to 3.85%, its first hike since November 2023. Then, investors became worried about global AI spending. Concerns about lower investment and more competition affected companies linked to data centres, including Goodman Group.

Goodman Group (ASX: GMG) led the losses, falling 5.9% for the week. Scentre Group (ASX: SCG) dropped 4.7%, and Stockland (ASX: SGP) also declined alongside the broader sector. For REIT investors who expected rate cuts to keep flowing, this was a sharp wake-up call.

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Why Rate Hikes Hit REITs Harder Than Most Sectors

Property stocks (also known as REITs) usually fall more than most other sectors when interest rates go up, mainly for two reasons.
First, higher interest rates mean higher loan costs. Property companies borrow a lot of money to buy buildings. When interest rates rise, their repayments become more expensive. This leaves them with less money to pay investors as income.

Second, higher interest rates make government bonds more attractive. When bond yields rise, investors can earn good returns with very low risk. For example, if a government bond pays 4.5% and a REIT pays 5%, many investors feel the extra return from REITs is not worth the extra risk.

What makes this moment particularly uncomfortable is that the RBA may not be done. NAB expects a second hike to 4.10% in May, and Goldman Sachs agrees. The RBA’s own forecasts show inflation staying above its target range until mid-2026. One rate hike is usually manageable for REITs. But two hikes can change the numbers completely and make property stocks much less attractive.

3 ASX Property Stocks, 3 Different Risk Profiles

Goodman Group (ASX: GMG) is the biggest property stock on the ASX and makes up more than 40% of the AREIT index. Its focus on data centres and logistics has helped it grow strongly in recent years. However, this same focus became a weakness when investor confidence in AI started to fade. With a P/E ratio of 36 times, the market is assuming many years of strong future growth. Goodman will release its half-year results on 19 February. At current prices, waiting for this update before buying more shares looks like the smarter option.

Scentre Group (ASX: SCG) stands out for investors looking for stable income during uncertain interest rate conditions. The company owns 42 Westfield shopping centres, with very high occupancy of 99.8%. Rents at its speciality stores are rising by an average of 4.4%, which is higher than inflation. Scentre offers a dividend yield of about 5% and is trading below the value of its assets. Among these three property stocks, it appears to offer the best value right now. Good-quality property stocks at discounted prices are not common.

Stockland (ASX: SGP) offers a safer and more balanced option. It owns a mix of residential communities, shopping centres, and logistics properties, so it is not overly dependent on one type of property. Its debt levels are low, with gearing at 25.2%, and it has A$2.9 billion in available cash and funding. This strong financial position means it is unlikely to be forced to sell assets even if interest rates rise further. For investors wanting broad exposure to property with lower risk, Stockland looks like the safest choice at present.

The Investor’s Takeaway for ASX Property Stocks

This sell-off is real and could get worse if the RBA hikes again in May. But well-run property stocks trading below what their buildings are worth do not stay cheap forever. Scentre with near-full shopping centres, and Stockland with low debt, tend to reward patient investors over one to two years.

Rather than trying to pick the exact bottom, buying in stages makes more sense. Putting money to work gradually during uncertain times has historically worked well for income-focused investors.